When a plaintiff sued two credit card companies for a large purchase that never materialized, the district court tossed his claim because he paid the credit balances. An appellate court affirmed the lower court in what is a reminder of the limits of federal credit card protections.
In a Jan. 26 decision, the 10th Circuit Court of Appeals upheld district court dismissals of a plaintiff’s Fair Credit Billing Act lawsuits against credit card companies for products he bought but didn’t receive. He lacked a claim against the companies under the FCBA, the court held, because he’d paid the outstanding balance for the purchases. The case is a warning of the risks that entities take on when they make large buys on credit for products they don’t immediately receive.
Malik Hasan purchased more than $1 million of wine from supplier Premier Cru using credit issued by Chase Bank and American Express, But Premier Cru later filed for bankruptcy and only fulfilled a fraction of Hasan’s orders.
Hasan filed an initial proof of claim with the Premier Cru bankruptcy proceedings. He contested a settlement that would allow the wine seller to liquidate its remaining inventory and spread the proceeds among all claimants, but the bankruptcy court approved it. This resulted in a loss that the plaintiff has been trying to recover through other means.